Contractors in Embedded Development: Is It Really the Best Solution?

The more I'm in this industry, the more I see that many companies make a serious mistake when hiring external developers or contractors to develop or maintain their embedded solutions. I'm not talking about just a different contract type, but about outsourcing whole teams or entire projects.

The starting point for such a decision is usually the same. The team of contractors is less expensive than a team of full-time employees. But is that really the case? There are a few factors that are often overlooked, making the contractor route much more expensive or less effective than it should be.

The scenario tends to unfold like this: there's a firmware, software, or internal project that needs to be upgraded, modified, or enhanced. The obvious next question is, “Do we have anyone who can do this in-house? No? Let's hire an external team.” But is that really the best move? Sometimes it is, but the devil is in the details. Let’s look at them a bit closer.

Six Factors Worth a Closer Look

1. The hiring process is expensive. Yes, recruiting costs money. But a well-defined hiring process, a clear job posting on the company website, and a targeted social media campaign can both lower HR costs and improve results. What many companies don't realize is that external contracting firms often don't have ready-to-go candidates either and they'll run their own search once the lead comes in. The same people end up on the project, just at a higher rate, with the recruiting overhead baked into the project cost.

2. Core product knowledge should stay inside the company. Who built the system? Employees, contractors, or both? Regardless of the answer, the product's core knowledge needs to remain internal, otherwise the product will lose its unique value to your customers. If you hand everything over to an outside team, they'll take that expertise with them when the engagement ends and straight to your next competitor when the job is done. Of course, it is not possible to create a product without understanding it first. That said, contractors don't need to know everything to do good work. The key is a clear division of responsibility: keep critical architecture and proprietary logic in-house, and outsource the time-consuming, lower-sensitivity work. You need to clearly divide responsibilities to keep the key ideas internal and outsource the work that can be done without revealing them to the public. 

3. Division requires documentation, and documentation requires discipline. To split responsibility, it must first be clearly defined and documented. “Documentation” is a word many developers dread, but it can make or break a project. A typical set of Architecture, HLD, and LLD documents is not always necessary. It always depends on the complexity of the project, code, and device. Sometimes it might be a single document, sometimes a huge set of different ones. But as mentioned before, all the information must be split into segments of responsibility and well separated. This allows keeping some parts confidential while other ones can be public and available for an external workforce. This also shortens onboarding time, which directly increases team productivity and saves money.

4. Infrastructure has to support the work, not the other way around. Splitting responsibilities properly usually requires internal IT effort, including setting up correct access groups, infrastructure changes, VPN setups, and more. Basically, infrastructure must support the company's needs and be flexible to adapt to different projects and products while keeping similar principles. Internal IT is often one of the most underestimated links in this chain. Poor IT decisions slow everything down while the good ones speed it up greatly. Remember that IT is always a service for production, not the other way around. I’ve seen too many times where R&D was limited by “IT security policies” or badly set privileges, killing the daily work of developers. This was making projects more expensive because the IT was ruling everything. 

5. Cross-functional collaboration is a must. IT must work together as one team with other parts of the company and not as a completely separate unit. This is also true for other parts of that puzzle, for example hiring new developers is much easier when HR cooperates closely with hiring managers. As I already noted, hiring is an expensive process. Instead of hiring a whole new team, you could look together at the organization's history to see if there is someone who was already engaged in a similar project. Their experience is priceless, and will speed up the project with their ability to answer simple questions, prepare guidelines, and just letting newcomers know “who is who.” Having at least one internal person with some product experience, even just for a project start, is something very helpful. It decreases learning time, which is critical when a project begins.

6. Outsourcing can’t be used as a blame game. In a world increasingly focused on work-life balance and flexibility, hiring contractors is sometimes less about efficiency and more about having someone to point to when things go wrong. "The contractors wrote that" is an easier answer than examining why the company can't attract, develop, or retain the talent it needs. A company's reputation as an employer and the quality of its internal culture are directly connected to the quality of work it produces and to whether clients want to work with it at all.

When Contractor Dependency Is a Red Flag

There are probably several other factors that could be discussed, but in my opinion, the six shared here show that hiring contractors is not always a perfect solution. Outsourcing could also be a red flag for the organization. If a company consistently relies on external teams, it may be worth asking why. Common root causes include:

• HR processes are complex, unclear, or job descriptions are incorrect, making it impossible to find the right candidates in reasonable time at reasonable cost.
• Core product knowledge is lost or not properly documented, which makes it hard for current employees to support, maintain, or enhance products.
• The company’s internal processes are not optimal, so it is easier to blame external factors for possible project failures rather than fixing its own problems first.
• There is high turnover driven by poor processes, lack of trust, or a workplace culture that doesn't retain people long enough to build meaningful expertise.

These patterns are common in software development generally. So where does embedded fit in?

Why Embedded Makes Everything More Difficult

Most embedded teams are small. Each device type is unique, requiring its own toolchain, SDK, communication protocols, debugging setup, and testing methodology. The skills and infrastructure needed to build GPU firmware are nothing like what's required for a coffee machine controller, a networking device, a wheel pressure sensor, or a mobile phone. Generic processes simply don't scale across this kind of diversity.

This creates daily friction that's invisible to decision-makers. Why can't developers follow the standard laptop security policy? Because they need to connect proprietary USB dongles. Why can't everyone use the same machine? Because compiling an OpenWrt build is not the same workload as sending email. Why does a developer need local admin rights? Because the toolchain requires it, and there are six of them.

These realities are obvious to embedded engineers and completely opaque to IT departments and HR teams. Without clear communication, the right processes, internal trust, and solid documentation, embedded projects will fail or, at the very least, cost far more than they should.

The Cost No One Puts in the Spreadsheet

It’s difficult to explain all those relationships just by looking at columns in a spreadsheet. But it’s important to remember that contractor costs are not just the hourly rate, it also includes the internal effort required to make the contractor’s work effective. That invisible cost is often larger than the cost of the contract itself.

So before hiring an external embedded team, it's worth asking: is your company actually contractor-ready? If the answer is no, bringing in outside help won't solve the underlying problems but will simply move the accountability somewhere else.